Central Bank relaxes rules for First time buyer deposits
From January next, all first time buyers, subject to normal lending criteria, will be able to borrow up to 90% of the purchase price. A small percentage (5%) of bank lending to first time buyers will be permitted to exceed the 90% ltv limit.
Second time buyers will require a 20% deposit. Lenders are allowed to exceed this ( 20% minimum deposit requirement) in 20 % of cases.
The upper limit on mortgage availability of 3.5 times gross income will remain in place with lenders allowed to make exceptions ( providing in excess of 3.5 times income) in 20% of cases.
The retention of the income limit will also act to keep a lid on house prices and restrict house price growth.
This move, together with the new tax rebate, aimed at first time buyers of new houses should really help with the housing market and encourage building.
The remaining matter to be dealt with is freeing up houses for young people and families as opposed to cash buyers. We believe some form of stamp duty for investors as opposed to owner occupiers may help this position.
These lending rules do not apply to switcher mortgages.